Erni v Brooky
| Jurisdiction | New Zealand |
| Judge | Paul Davison J |
| Judgment Date | 24 November 2020 |
| Neutral Citation | [2020] NZHC 3116 |
| Docket Number | CIV-2019-419-105 |
| Court | High Court |
Paul Davison J
CIV-2019-419-105
IN THE HIGH COURT OF NEW ZEALAND
HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA
KIRIKIRIROA ROHE
Family, Banking and Finance — application by the plaintiffs to recover money they advanced to the respondent, their granddaughter as loans — oral agreements — presumption of advancement — whether there was an implied term the plaintiffs could make demand for repayment of the whole of the outstanding balance — whether the advances were gifts, advances on her inheritance or unenforceable loans
J K Matena & M D Branch for Plaintiffs
K J Patterson for Defendant
This judgment was delivered by me on 24 November 2020 at 3:30 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Peter and Betty Erni (the plaintiffs) bring this action against their granddaughter, Katrina Brooky (the defendant) seeking to recover sums they claim to have advanced to the defendant as loans. The defendant does not dispute receiving the sums advanced by the plaintiffs, but she says that the sums were not loans, and were either gifts, advances on her inheritance from her grandparents, or unenforceable loans.
The amounts advanced by the plaintiff can be conveniently divided into two categories: property loans and truck loans. None of the loans were governed by written contracts.
The plaintiffs are now both aged in their mid-late 70s. They have three children and eight grandchildren. While they are close to all of their grandchildren, they were always particularly close to the defendant, who was their first grandchild. When the defendant was an infant and young child, she was in the day-to-day care of her parents, however the plaintiffs were also closely involved in her upbringing.
The plaintiffs previously owned and operated a holiday park at Pauanui on the Coromandel Peninsula. The defendant frequently spent time with them there and helped them out as required.
The plaintiffs say that over the course of their lives they have often provided financial assistance to their children and grandchildren, including from time to time gifting them money for various purchases.
In 2013, the defendant's son, K, was born. At that time the defendant was in a relationship with BP. The defendant and BP separated in April 2014, by which time K was one year old. The defendant then set about looking for a property to purchase. She and the plaintiffs together viewed several prospective residential properties, including a property at 1007 State Highway 3, Hangatiki, Te Kuiti (the Te Kuiti property).
Betty Erni (Betty) says that around August 2014, the defendant contacted her to tell her she intended to make an offer to purchase the Te Kuiti property. In discussions that followed, the defendant told Betty she did not have any money to pay the deposit, and she asked her to pay it for her. Betty says that she and the defendant then discussed how the defendant would repay the money. She says it was agreed between them that the defendant would repay the sum advanced at $250 per week with no interest. Pursuant to that agreement, Betty paid the deposit of $30,800 for the Te Kuiti property to Wrightson's Real Estate from the plaintiffs' joint Westpac Bank account on 15 August 2014.
On Betty's account, in September 2014, she and the defendant discussed how the defendant would pay the balance of the purchase price on settlement of the property. The defendant said that she had not arranged finance and did not have the money to pay the balance of the purchase price. The defendant told her grandmother she needed the house as a means of getting away from her former partner, and to provide a home for herself and her young son. Betty and the defendant agreed that the plaintiffs would provide her with the amount the defendant required to purchase the house on the same terms as the sum loaned to her for the payment of the deposit. Betty wanted to make sure that the defendant and her great grandson had a roof over their heads, and she and Peter were willing to assist by lending her the necessary funds. The terms she agreed with the defendant were that the plaintiffs would provide the funds required to complete the purchase as an interest-free loan to be repaid in instalments of $250 each Monday.
The defendant's account of these discussions is somewhat different. She says that the plaintiffs were always very supportive of her and K, and had offered to help her relocate. The plaintiffs made it very clear to her that they would assist her in purchasing a property for herself and K to live in. The plaintiffs repeatedly told her that their financial assistance was their way of giving her an early inheritance. She agreed with the plaintiffs that the weekly payments of $250 she made were to be by way of compensation for them having provided her with the money for the house purchase. It was agreed that she would make the weekly payments into a bank account that the plaintiffs controlled, and which would be her nest egg or savings, so that when they died, she would have built up her savings. Her grandparents explained to her that in buying her a house they had provided her with an early inheritance, and so she would not be left any further money in their wills.
On 24 September 2014, Betty paid $278,736 from the plaintiffs' joint account at Westpac to the trust account of the solicitor handling the purchase. The sum included the amount required to complete the purchase of the Te Kuiti property and to meet the related legal fees. The plaintiffs had therefore advanced $309,536 to the defendant for the Te Kuiti property, comprising $30,800 for the deposit, and $278,736 to settle and meet legal fees (the house loan). The title to the property was transferred to the defendant and registered in her sole name on 29 September 2014.
On 13 October 2014, the defendant made her first payment of $250 to the plaintiffs. The payment was made into the plaintiffs' joint account at Westpac pursuant to an automatic payment arranged by the defendant and noted by her as “Trina House Mortgage”. Although these payments were described as relating to a mortgage, no mortgage security for the house loan had been discussed or arranged, and there was no mortgage registered on the title of the property. The defendant thereafter continued to make weekly payments of $250 by automatic payments into the plaintiffs' Westpac account.
The defendant says she understood the plaintiffs to be keeping these $250 payments aside for her.
During October 2014, the defendant asked Betty if she would meet the cost of house insurance for the Te Kuiti property. Betty agreed and, on 22 October 2014, she paid $1,461 to Rothbury Insurance Brokers for the house insurance.
On 2 February 2015, Betty accompanied the defendant to a shopping centre in Hamilton where the defendant was looking for a new stove for the house on the Te Kuiti property. Betty says that, once the defendant had chosen the stove she wanted to purchase, she asked her grandmother if she would pay for it, saying that she would pay her back. Betty says that, on the understanding that the defendant would repay her, she proceeded to pay $1,670 for the stove and later added this sum to the amount of the house loan.
On 10 December 2014, both plaintiffs made wills in which they revoked all earlier wills. In each case the plaintiffs appointed the other and the defendant as their executors and trustees, and gave a life interest to the other over whatever property constituted their principal place of residence at the date of their death. Both wills provided that upon the death of the surviving spouse, their estate was to be held on trust for their three adult children in equal shares. The wills also provided that in the event the other predeceased them (as testator), the net estate would then be divided equally between the plaintiffs after bequests to the plaintiffs' six grandchildren who, other than the defendant, were to receive specified sums of either $200,000 or $100,000. In relation to the defendant, the wills provided that:
I give to my granddaughter KATRINA JEAN BROOKY (or her executors or administrators, if she predeceases me) any debts owing by her to me.
In 2016 the defendant was operating a small business which supplied fencing materials. The plaintiffs say that, in early 2016, the defendant asked them whether they would assist her with finance to purchase a truck at a cost of around $300,000. The defendant intended to use the truck for transporting fencing supplies and to expand her business to include transport services. Betty says that at the time the defendant raised this proposal with her and Peter, she was maintaining the weekly payments of $250 for the house loan. Accordingly, they had no concerns about her reliability and trusted her to repay any further loan that they provided to her.
Betty says that she and Peter agreed with the defendant to lend her the money she required to purchase a truck on the understanding the loan would be short-term. The plaintiffs believed that once the defendant had the trucking-related aspects of her business up and running, she would arrange finance for the truck from a financial institution and repay the plaintiffs' loan. Betty says that she and Peter discussed with the defendant what the defendant would do if the trucking aspects of her business did not go well. The plaintiffs understood from their discussions that in that event, the defendant would simply sell the truck and repay the truck loan. There was also discussion about interest. Betty says that, although the defendant...
To continue reading
Request your trial
-
Erni v Brooky
...HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE CIV-2019-419-105 [2020] NZHC 3116 BETWEEN PETER MICHAEL ERNI AND BETTY MERLE ERNI Plaintiffs AND KATRINA JEAN BROOKY Defendant Hearing: 30 June 2020 Appearances: J K Matena & M D Branch for Plaintiffs K ......